The Canadian dollar closed lower against its U.S. counterpart on Friday, after news that Canada’s economy grew at a slower-than-forecast pace in the fourth quarter lowered expectations the Bank of Canada would raise interest rates any time soon.
Canada’s gross domestic product grew at an annualized rate of 0.4 per cent in the fourth quarter, down from 2.0 per cent in the third quarter and slower than the 1.2 per cent rate expected by analysts, largely due to lower export prices of crude oil and crude bitumen, Statistics Canada said on Friday.
GDP edged down 0.1 per cent in December as a result of reduced output across most goods-producing industries.
“It was softer than expected obviously, with the quarter up 0.4 per cent in GDP terms,” said Nathan Janzen, senior economist at the Royal Bank of Canada. “It looks like a lot of the weakness can be attributed to softening of the oil patch. If you’re the Bank of Canada, it’s another reason to hold off on raising interest rates for a while.”
At 3:58 p.m. EST, the Canadian dollar was trading at 1.3301 to the greenback, or 75.18 U.S. cents, down 1.09 per cent.
The currency’s strongest level of the session was 1.3130, while its weakest level was 1.3307.
Canada’s economy posts 0.4 pct annualized Q4 growth.
U.S. crude prices were down 0.23 per cent to $57.09 a barrel, while Brent crude lost 0.21 per cent to $66.17 a barrel.
Canadian government bond prices were higher across the maturity curve, with the two-year price up 2 cents to yield 1.769 per cent and the benchmark 10-year rising 2 cents to yield 1.94 per cent.